US stock indexes are holding up soft gains as investors continue to focus on talks for a potential second round of US fiscal stimulus, amid mixed economic data and concerns over a resurgence in Covid-19 cases.
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US Labor Department data showed that first-time filers for jobless benefits declined to 837,000 in the week ended Sept. 26. Economists polled by Dow Jones expected a total of 850,000. Meanwhile, US manufacturing activity slowed in September as a purchasing manager’s index slipped to a reading of 55.4 from 56 in August, according to the Institute for Supply Management.
The Dow Jones Industrial Average is up 0.3%. The tech-heavy Nasdaq Composite Index is rising 1% and the S&P 500 Index is edging up 0.6%.
Shares of Bed Bath & Beyond are spiking 30% after the home goods retailer’s 2Q comparable store sales returned to growth for the first time since 4Q of fiscal 2016. Comparable store sales grew 6% in 2Q year-over-year, beating analysts’ estimates of a 2.1% decline. EPS surged 47% to $0.50 year-over-year, in comparison to analysts’ expectations of a loss of $0.30 per share.
Comfort food demand for Doritos, Cheetos and other snacks during the coronavirus pandemic is benefiting PepsiCo. The beverage and food giant expects to post a larger-than-forecast profit for the full year as its snacks and foods businesses are forecast to remain resilient while its beverages business should sustain momentum for the balance of this year. Full-year core earnings are guided at $5.50 per share, which is above the Street consensus of $5.36 per share. The upbeat guidance comes as PepsiCo reported that it earned $1.66 per share on an adjusted basis in the third quarter ended Sept. 5, exceeding analysts’ expectations of $1.49 per share.
STMicroelectronics is gaining 7% as the semiconductor said it expects to top its annual sales forecast following a sharp rise in demand for automotive products and microcontrollers in the third quarter. STMicro now forecasts preliminary net revenues in 3Q ended Sept. 26 of $2.67 billion, up 27.8%. The prior outlook published in July was for Q3 revenues to be $2.45 billion. The company now plans for FY20 revenues to be above $9.65 billion versus the range of $9.25 billion – $9.65 billion it expected previously.
Dividend news: Starbucks is adding 1.5% after its Board of Directors approved a 10% hike in the coffee chain’s quarterly cash dividend to $0.45 per share. The increase boosts the company’s annual dividend rate to $1.80 per share.
Cowen analyst Andrew Charles upgraded SBUX to Buy from Hold and boosted the price target to $99 from $77, saying that he views the stock as “attractive on a total-shareholder-return basis, with room for multiple expansion”.
“We view early signs of the US recovery as durable, aided by broadening digital access through expanded pay options for loyalty and 23% of U.S. stores adding curbside pickup. Covid-19 presents new efficiency opportunities [to drive] 15% earnings-per-share growth for 2022-2023.”
In airline news: As announced, American Airlines will begin to furlough 19,000 workers as the $25 billion Payroll Support Program under the US CARES (Coronavirus Aid, Relief and Economic Security) Act expires today. AAL shares are up 2.4%. Peer United Airlines is forced to furlough over 13,000 workers. Both airlines have said that they would reverse the furloughs, should efforts to extend the US federal aid program succeed over the next few days.
In corona-related news: AstraZeneca’s Covid-19 vaccine candidate AZD1222 has been chosen by the European Medicines Agency (EMA) to be put under a rolling review, which could potentially speed up assessment for future approval of the experimental vaccine. The rolling review will continue until enough evidence from ongoing studies is collected for a formal marketing authorization application, the EU agency said.
Last, but not least just in time for holiday season to start Google rolled out 2 new smartphones, Pixel 4a 5g and Pixel 5, which will start to sell at $499 and $699, respectively. The tech giant also launched a new Chromecast streaming device and Nest Audio speaker to better compete with Amazon and other players in the smart home market. It has set a $49.99 price for the streaming device and $99 for the Nest Audio speaker.